Friday, December 05, 2008

Cullen knew

When former ACC Minister Maryan Street wrote to Michael Cullen in October advising him of an expected shortfall in the ACC non earners account, she told Cullen something that he already knew - that the ACC non earners account needed $1b more over the next three years, and it could run out of money by March. ACC have known much of this for some time but hadn't officially quantified it.

The non earners account has always been an issue for Governments. Cullen knew the extent of the problem at least two months before Street wrote to him but chose to do nothing about it. It may not have been under "active consideration" but the Government certainly appeared to have known the extent of the problem and what the Treasury had recommended -but chose not to make a decision on it.

Ms Street provided the official papers to the Herald, including the August 14 report from ACC that detailed an estimated shortfall of over $900 million over the next three years. The figures were actually estimated out for five years, taking the shortfall to $1.5 billion.

Street only wrote to Cullen in October to confirm what he already knew. Cullen did nothing for two months before prefu. That is disgraceful fiscal irresponsibility. No wonder Treasury officials are irate at the previous administration as the non earners account was under active consideration for some time by Treasury officials.

But the Government preferred to deny and delay. All workers and the country will pay for this - through increased levies to beef up the blown out earners account, and through taxation to the non-earners account.